After the strong GDP growth of seven per cent in the first quarter of this year, GDP growth is expected to slow down to 5.3 per cent in 2007 and 4.4 per cent in 2008
After the strong GDP growth of seven per cent in the first quarter of this year, GDP growth is expected to slow down to 5.3 per cent in 2007 and 4.4 per cent in 2008, the Zagreb Economic Institute said in the latest issue of its Economic Outlook Quarterly.
At the same time, personal spending will remain relatively strong, investments will slow down, while exports will pick up. The labour market is expected to maintain positive trends, including a decline in the unemployment rate and gradual pay increases. The inflation rate will rise slightly from 2.5 per cent in 2007 to 2.8 in 2008.
Analysts at the Economic Institute see a relatively strong imbalance in foreign trade and fiscal expansion as main risks to economic growth.
In the fiscal domain, analysts believe that some of the recently undertaken measures would have adverse effects on the long-term sustainability of public finance.
The Economic Institute said that its forecasts were optimistic.
Ministry of Economy, Labour and Entrepreneurship
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